the paris agreement and market signals: a survey - center on global energy...

Dav id Sanda low, Ke i th Benes and Ca i t l in August in

NOVEMBER 2016

THE PARIS AGREEMENT AND MARKET SIGNALS: A SURVEY

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energypolicy.columbia.edu | NOVEMBER 2016 | 1


Columbia University in the City of New York

David Sandalow, Keith Benes and Caitlin Augustin*

NOVEMBER 2016

*David Sandalow is the Inaugural Fellow at the Center on Global Energy Policy at Columbia University. He has served in senior positions at the White House, State Department and US Department of Energy. Keith J. Benes is a Fellow at the Center on Global Energy Policy. He previously served as a Senior Advisor at the US Department of State. Caitlin Augustin is a Research Assistant at the Center on Global Energy Policy. She will receive her PhD from the University of Miami in December 2016.


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ACKNOWLEDGMENTSThe authors thank Paul Bodnar, Jason Bordoff and Andrew Light for their thoughtful comments on earlier drafts.

Support for this work was provided in part by Mitsubishi Corporation.



EXECUTIVE SUMMARYThe Paris Agreement entered into force on November

4, 2016, 11 months after it was adopted by more than

190 countries. The agreement establishes ambitious

goals for the transition to a low-carbon economy, which

will require substantial increases in climate finance in the decades ahead. (“Climate finance” is a term widely used to mean financial flows that contribute to climate change mitigation or adaption.) According to the International

Energy Agency, spending on low-carbon technologies

will need to increase at least fivefold over the next 20 years to meet the agreed global goal of limiting global

average temperatures to well below a 2°C/3.6°F increase

from pre-industrial levels.

In the public dialogue concerning the Paris Agreement,

there has been considerable discussion about the potential

impact of the accord on private sector financial decisions. However, data concerning the views of private sector

decision-makers on the Paris Agreement are sparse. To

help fill that gap, the authors surveyed investors, experts in energy and infrastructure development and non-

experts using a survey methodology known as “conjoint analysis,” in which respondents are asked to weigh the relative importance of different parts, elements or

features of an outcome. The use of this methodology

is novel in this area. The survey was conducted both

before and after the Paris conference and collected 278

viable responses. Just over half of the respondents were

from the United States (57 percent), with the remaining

respondents coming from the United Kingdom (23

percent) and other countries (20 percent). Respondents

from developing countries comprised 13 percent of the

total respondents. (Budget and time constraints precluded

obtaining a larger sample at this stage of the project.)

The survey results point to the following

observations:

• Respondents viewed national climate policies as the

most important tools for increasing climate finance. These policies included increasing subsidies for

renewable energy investments, decreasing subsidies

for fossil fuels, maintaining consistent policies

supporting green investment and providing support

for conducting early-stage feasibility studies for

green investments.

• Private sector respondents ranked several elements of

the Paris Agreement as among the most important

factors for “creating a favorable state for climate

finance investment,” second only to national climate policies and ahead of national policies on other

topics, market conditions and governance issues.

These results tend to validate the view that the hybrid

nature of the Paris Agreement—setting global goals

while building a binding international system to

support nationally determined climate policies—has

the potential to significantly affect climate finance. That said, respondents emphasized that the impact

of the Paris Agreement on investment flows in the future will depend upon further work and

implementation.

• According to the survey data, the most important

step for strengthening market signals from the

Paris Agreement could be a robust system of

transparency, including details about countries’

domestic implementation and deep decarbonization

plans. Many respondents indicated that more details

about how countries will implement their targets is

more important than the target itself.

• A striking result from the survey was the extent to which respondents drawn mostly from the US and UK

private sectors considered international commitments

by governments to increase climate funding to be

relatively unimportant in mobilizing climate finance. In one respect, this tracks a divide in the UNFCCC

negotiations, in which some developed countries have

argued that private funds must be counted in evaluating

progress toward climate finance pledges, while some developing countries have argued that pledges should

be met mostly or only from public funds. Yet in other

respects the survey results are potentially revealing. In

many contexts, private sector decision-makers look to governments to co-finance or share risk before committing capital. The fact that private sector

respondents to our survey weighted international

governmental pledges to provide financing so low appears to indicate that the respondents find such pledges to be, at a minimum, several steps removed

from decision-making on private capital. More work

to evaluate the focus on public finance within the UNFCCC negotiations could prove especially valuable.



• Respondents ranked “high government corruption” as the factor most likely to prevent a climate finance investment from going forward.

These results suggest that the Paris Agreement has

the potential to significantly influence climate finance, including private sector financial decisions. It also suggests strategies and priorities for enhancing that

influence. The survey sample was drawn largely from the United States and United Kingdom; therefore, caution

should be exercised in drawing inferences about views in other countries. Building on this research by obtaining

larger and more representative samples, including more

respondents from developing countries, could help

inform the design of national and international policies

to support climate finance. In the event the next US administration changes policies with respect to these

issues, this methodology could be used to help assess the

impact of those changes on attitudes of investors and

others.



Acknowledgments .......................................................................................................................................................... 2

Executive Summary .................................................................................................................................................... 3

Table of Contents .......................................................................................................................................................... 5

Introduction ............................................................................................................................................................... 6

Background on Climate Finance ............................................................................................................................... 7

The Paris Agreement and Market Response ............................................................................................................ 9

Survey ......................................................................................................................................................................... 10

Discussion ................................................................................................................................................................ 14

Conclusion ................................................................................................................................................................. 16

Appendix A ................................................................................................................................................................. 17

Questions Asked in Conjoint Portion of the Survey ........................................................................................... 17

Four “Feature Categories” and Twenty-One “Feature Levels” ............................................................................. 17

Endnotes ................................................................................................................................................................... 18

Figures

Figure 1: Shift in Energy Investment Necessary to Get to 2-Degree Path

Cumulative Investment 2015–40 in Trillions of Dollars ........................................................................................ 7

Figure 2: Twelve-Month Comparison of Stock Indices ............................................................................................ 9

Figure 3: Relative Importance of International Agreement Features (Potential Paris Outcomes)

Compared to Other Policy and Market Features .............................................................................................. 11

Figure 4: Relative Importance of All Twenty-One Policy and Market Features Respondents Assessed ......... 12

Figure 5: Percent of Respondents Identifying Individual Features

That Could Prevent Them From Making a Climate Finance Investment ...................................................... 13

TABLE OF CONTENTS



INTRODUCTIONIn December 2015, over 190 countries gathered in Paris

and adopted a new climate change agreement that will

set the direction for international climate action for the

coming decades. The Paris Agreement entered into force

on November 4 of this year.

A frequent theme in commentary on the Paris Agreement

is that it sends a signal to the private sector that the world

is moving to a low-carbon economy.1 UN Secretary-

General Ban Ki Moon, for example, said the Paris Agreement “finally provides the policy signals the private sector has asked for to help accelerate the low-carbon

transformation of the global economy.”2 Many national

leaders, business executives and environmental groups have emphasized this theme as well.3

Others have questioned the likely impact on private sector decisions. Critics have characterized the Paris

Agreement as providing no more than nonbinding

promises and leaving key issues unresolved.4 Any impact

of the Paris Agreement on equity markets appears to

have been fleeting.5

So did the Paris Agreement send a signal to the private

sector? And if it did, what features were most important?

Are there aspects of the Paris Agreement that can be

reinforced or replicated to strengthen any signal? To

assess these questions, we surveyed investors, experts in energy and infrastructure development and non-experts about a variety of topics related to the Paris Agreement.

We used a survey methodology known as “conjoint analysis,” in which respondents are asked to weigh the relative importance of different parts, elements or

features of an outcome. This use of this methodology

is novel in this area and can provide a useful tool for

further policy analysis.

In this paper we first provide general background and then describe our survey and its results.



BACKGROUND ON CLIMATE FINANCEThe transition to a low-carbon economy will require

substantial new investment in the energy sector in the

decades ahead. According to the International Energy

Agency (IEA), spending on low-carbon technologies

will need to increase at least fivefold over the next 20 years (from approximately $400 billion per year in 2014 to over $2 trillion in 2035) to meet the agreed global goal of limiting global average temperatures to well below a

C/3.6°F increase from preindustrial levels.6

The dollar figures are large, though not in comparison with the total investments needed to finance the world’s energy needs. IEA estimates that the incremental

cost of a low-carbon energy system necessary for an

emissions trajectory consistent with the 2°C/3.6°F goal is approximately 5 percent between now and 2030 (and 8 percent between now and 2040).7 As shown in Figure

1, this shift would involve reducing cumulative capital

investments in fossil fuel supply and generation, as well

as the distribution and transmission of electricity, by $9 trillion between now and 2040, and increasing capital

investments in nuclear, renewables and energy efficiency by $15 trillion over that same time period. This results in a net increase of $6 trillion in cumulative capital investments to 2040.

Figure 1: Shift in Energy Investment Necessary to Get to 2-Degree Path

Cumulative Investment 2015–40 in Trillions of Dollars

SOURCE: International Energy Agency, World Energy Outlook 2015, Authors’ analysis.

FossilFuelSupplyand

Genera1on

TransmissionandDistribu1on

Nuclear

RenewableEnergy

EnergyEfficiency

IEA450Scenario

IEANewPoliciesScenario

$0

$10

$20

$30

$40

$50

$60

$70

$80



The total investment requirements for clean energy

are split evenly between developed and developing

economies. While clean-energy investments in developing

countries have been lagging behind those in developed

countries, in 2015 capital investments for renewables in

developing countries (including China) exceeded those in developed countries for the first time ($156 billion versus $130 billion).8 Most of the money for these investments

was raised and spent in the same country (74 percent

of total public and private finance flows and 92 percent of private climate finance in 2013 and 2014).9 With the

cost of clean energy rapidly decreasing and government

policies supporting it continuing to spread to additional

countries, there is reason to be optimistic.

Yet financing flows for clean energy need to increase substantially to meet global climate goals. Financing

flows need to increase in all areas—within developed countries, within developing countries and between

developed and developing countries. The OECD and Climate Policy Initiative estimate that the current climate

finance flows from developed to developing countries averaged approximately $57 billion in both 2013 and 2014, including bilateral public funds, multilateral funds

and “mobilized” private finance.10 Disagreement remains

as to whether the $57 billion should all count toward meeting the existing goal of mobilizing $100 billion from developed to developing countries because of

differences over the definition of what is “additional” public finance and whether the private finance counted was actually mobilized by the public finance.11

The term “climate finance” is widely used to mean financial flows that contribute to climate change mitigation or adaption. Sometimes the term is used to

refer to cross-border financial flows, in particular from developed to developing countries, though often it is used

to refer to spending on climate mitigation or adaptation

in any context.

There is an extensive literature on climate finance.12 Many

studies have identified policies to promote climate finance.13

These policies include:

• setting a price on carbon (through cap-and-trade

system, carbon tax or other measures);

• establishing a feed-in tariff and transparent

procedures for grid access;

• reducing delays and improving transparency in

permitting procedures for clean energy projects;

• improving long-term stability of climate policies

(i.e., not retroactively removing feed-in tariffs or

subsidies, putting policies in place for more than one

or two years); and

• training programs to enhance in-country technical

expertise regarding clean-energy projects.

Studies have also identified barriers to increased flows of climate finance. Those barriers include uncertainty with respect to policy support (an issue that has been especially

acute in recent years in the United Kingdom, Italy, Spain

and the United States, among other countries.)14 Lack of

in-country expertise and limits on the availability of local financing have also been barriers (in many countries in the world and especially in developing countries). These

barriers can influence investment flows both within a country and between countries.15



THE PARIS AGREEMENT AND MARKET RESPONSEThe Paris Agreement has many parts. The preparations

for the Paris Agreement were among the most important.

Even before the Paris conference opened, more than 170

countries submitted national climate action plans known as

Intended Nationally Determined Contributions (INDCs).

This put climate change on the agenda in national capitals

around the world, in a context in which many governments were eager to display their ambition in addressing the climate

challenge. In the Paris Agreement itself, countries agreed to

(among other things) ambitious global temperature goals,

a long-term goal of reaching zero net emissions in the

second part of this century, the establishment of a single

system of transparency in the UNFCCC to track progress

on meeting a country’s INDCs and a renewed commitment

from developed countries to mobilize $100 billion per year to assist developing countries with climate finance needs.

In the six months before and after the Paris negotiations, clean-energy indices mostly underperformed both the

stock market overall and other parts of the energy sector

such as oil and gas (see Figure 3). Coinciding with the

conclusion of the Paris Agreement, clean-energy indices

outperformed oil and gas indices for approximately five weeks. This time period also coincided, however, with

the extension of the US tax credits, which may have a bigger impact on the valuations or many clean-energy

companies that operate in the United States. In any event,

the magnitude of the movement of clean-energy indices

in December 2015 and January 2016 was not large in

comparison to other movements in the past several years.

Figure 2: Twelve-Month Comparison of Stock Indices

Note 1: S&P Dow Jones Indices, 100 equals value on 5/19/15.

40

50

60

70

80

90

100

110

5/19/15 6/19/15 7/19/15 8/19/15 9/19/15 10/19/15 11/19/15 12/19/15 1/19/16 2/19/16 3/19/16 4/19/16 5/19/16

S&PGLOBAL1200 S&PGlobalOilIndex S&PGlobalCleanEnergyIndex

U.S.ExtendsWindandSolarTaxCreditsforFiveYears

ParisAgreementAdoptedatCOP21



SURVEY We deployed a fifteen-minute web-based survey through multiple channels both before and after the

Paris negotiations and collected 278 viable survey

responses. Just over half of the respondents were from

the United States (57 percent), with the remaining

respondents coming from the United Kingdom (23

percent) and other countries (20 percent). Respondents

from developing countries (defined as non-Annex 1 countries in the UNFCCC) comprised 13 percent of

the total respondents. (We attempted to obtain a more

globally representative sample but were unable to do

so within the budget and time constraints for this stage

of our project. We would welcome the opportunity to extend this survey or ones like it to a broader pool of respondents.) The respondents were sourced through

an expert panel provider as well as the crowdsourcing platforms Mechanical Turk and Prolific Academic (both heavily cited within the survey literature).*

The core expert group of respondents (106), sourced and verified by a panel-provider, were individuals from the United States and United Kingdom who work at

banks, institutional investors, insurance companies and

other businesses in the financial sector. The individuals in this core expert group were predominantly investors in energy or infrastructure projects, but not necessarily clean-energy projects. A second group of respondents (96) were developers, consultants, analysts and regulators

with relevant expertise in energy and other infrastructure development. These first two groups of respondents on average had approximately a dozen years of experience, and just over half were in supervisory positions. A third group of respondents (76) was drawn from the

general population. In this paper we report primarily

on the results from the full respondent group (n=278).

We assessed whether there were significant differences in responses from the three subgroups, as well as from

different geographic regions. Where relevant, we have

identified those differences.

We undertook a conjoint survey – a tool for determining how people value different attributes of a product,

service or outcome. In conjoint analysis, respondents are asked to make judgments concerning the relative importance of different features, elements or parts of

whatever is being assessed. Conjoint studies have been widely used in market research for many years and more

recently deployed to diverse topics including healthcare

systems16, environmental impact evaluation17 and energy

policies.18

For our survey, we identified 21 policies or approaches relevant to climate finance, categorized under four broad topics: national policies, international policies, market

conditions and infrastructure. (Using language typical in

conjoint analysis, we described each policy or approach as a “feature.”) All of the features we included have been identified by experts and in the literature on this topic as important or potentially important to help drive climate

finance. Respondents went through a multistep process to rank the relative importance of features for creating

a more favorable state for climate finance investment, with a focus on clean-energy investments. We designed

our conjoint survey in four parts based on a framework first published in 1988.19 This framework forms the basis

for the conjoint survey question block in Qualtrics,20 our

survey provider.* A complete list of the questions asked

and the features assessed can be found in Appendix A. This process provided us scores to calculate both the

importance rating and desirability of each feature—

showing us not only if a feature was preferred, but also

how intensely it was preferred relative to other features.

We used these scores to determine the utilities for the

broad categories and specific features by multiplying the importance rating and desirability rating.

Our analysis of the conjoint survey results points to

the following observations.

First, respondents viewed national policies as the most

important tools for increasing climate finance. These

*The survey framework and output of results for this paper was generated using Qualtrics software, Version winter 2015/

spring 2016 of Qualtrics. Copyright © 2016 Qualtrics. Qualtrics and all other Qualtrics product or service names are registered

trademarks or trademarks of Qualtrics, Provo, UT, USA. <http://www.qualtrics.com>

*The method of conjoint analysis we used was a “self-explicated conjoint,” which focuses on the evaluation of individual attributes rather than packages of attributes.



policies, which we categorized as National Energy and

Climate Features, included increasing subsidies for

renewable energy investments, decreasing subsidies for

fossil fuels, maintaining consistent policies supporting

green investment and providing support for conducting

early-stage feasibility studies for green investments.

Second, respondents ranked international agreements as

the second most important tools for driving climate finance. The International Agreement Features in our survey were

ranked ahead of many national policy and market features

that had been previously identified in the policy literature as important to help drive climate finance (we categorized these various other features as Market and Financial Features

and National Infrastructure Features).21 The Market and Financial

Features included the availability of credit financing in country, the rate of energy-demand growth in-country and

the level of corporate taxation in-country. The National

Infrastructure Features included features such as developing

a national infrastructure roadmap and having predictability

in permitting and licensing (see Figure 4).

Third, respondents ranked the global long-term emissions

reduction goal highest among the international features.

Developing a system of international transparency and

accountability for national climate policies and countries’

emissions reduction commitments also ranked among

the most important of any individual features. In fact,

the only individual features ranked above these three

international features were in-country features that

provided direct support for climate and clean-energy

investments.

Fourth, the international commitment to increased public

climate finance ranked as the lowest of the 21 national and international policy and market features, dramatically

lower than the other international agreement features.*

(See Figure 4.) The composition of our sample—heavily

weighted toward the private sector—likely played a role

in this result.

Figure 3: Relative Importance of International Agreement Features (Potential Paris Outcomes) Compared

to Other Policy and Market Features

Note: Respondents assigned 100 points across the four feature categories, with more important feature categories receiving more points.

0 5 10 15 20 25 30 35

Na)onalInfrastructureFeatures

MarketandFinancialFeatures

Interna)onalAgreementFeatures

Na)onalEnergyandClimateFeatures



Third, respondents ranked the global long-term emissions

reduction goal highest among the international features.

Developing a system of international transparency and

accountability for national climate policies and countries’

emissions reduction commitments also ranked among

the most important of any individual features. In fact,

the only individual features ranked above these three

international features were in-country features that

provided direct support for climate and clean-energy

investments.

Fourth, the international commitment to increased

public climate finance ranked as the lowest of the 21

national and international policy and market features,

dramatically lower than the other international

agreement features.* The composition of our sample—

heavily weighted toward the private sector—likely

played a role in this result.

Figure 4: Relative Importance of All Twenty-One Policy and Market Features Respondents Assessed

Note: The utility scores for each factor are derived by dividing the level of preference for each by the points assigned to each overall

category.

*This comparison of each individual policy or market attribute was obtained by combining the level of preference respondents

gave to each attribute within a category (where only the attributes within that category were being compared by respondents)

with the relative points given to each category (where respondents were comparing categories).



Fifth, results did not vary significantly between developed- and developing-country respondents. In fact, developed-

and developing-country respondents both drew their

eight top-ranked features from National Energy and

Climate Features and International Agreement Features,

although developed-country respondents were more

likely to rank features related to energy subsidies slightly

higher (both increasing subsidies for renewable energy

and decreasing fossil fuel subsidies). Developing-country

respondents also viewed international commitments to

increase public finance as the least important of the international features and ranked it second to last among

all 21 features. However the sample size of developing-

country respondents was small (36 respondents) and not

necessarily representative. Further surveys with larger,

more representative samples would be necessary to draw

more robust conclusions.

Sixth, when asked to identify features that would prevent or inhibit climate finance investments, respondents were most likely to identify national policies or conditions.

Government corruption was identified as a potential barrier to making a climate finance investment by 61 percent of respondents. Roughly 44 percent of

respondents identified low national political support for climate finance investments and poor national security conditions and stability as potential barriers. Low

international support was identified by approximately 25 percent of respondents. Respondents who took the

survey before the Paris negotiations were completed

(n=93) also were given the option of identifying the

“failure to reach an agreement in Paris” as a barrier. Fifteen percent of those respondents stated that failure

to reach an agreement in Paris would be a barrier to

making a climate finance investment.

Figure 5: Percentage of Respondents Identifying Individual Features That Could Prevent Them From

Making a Climate Finance Investment

0% 10% 20% 30% 40% 50% 60% 70%

Other

Thereisnofactorthatwouldpreventfutureinvestmentinclimatefinance

Lowsocialacceptanceofclimatefinanceinvestments

LowinternaAonalsupport

LownaAonalfinancialinvestmentinclimatefinanceprojects

LowlocalpoliAcalsupportforclimatefinanceinvestments

LownaAonalsecurityandstability

LownaAonalpoliAcalsupportforclimatefinanceinvestments

HighgovernmentcorrupAon



DISCUSSIONOur survey results provide potential insights relevant to climate finance, national climate policies and the UNFCCC negotiations.

First, national climate policies are widely perceived to

be the top priority in mobilizing climate finance. This result was robust across all respondent categories in our

survey. This view is consistent with the structure of the

Paris Agreement, which places great emphasis on the

importance of national climate policies by requiring

countries to adopt and report on nationally determined

climate plans (known as “nationally determined

commitments” or “NDCs”). Like the negotiators who shaped the Paris Agreement, our respondents gave high

priority to national climate policies.

Second, our survey data support the conclusion that the

Paris Agreement did, in fact, send a signal to the private

sector. When asked to identify “the relative importance

of features for creating a more favorable state for climate

finance investment,” our private sector respondents ranked elements of the Paris Agreement as the second

most important (just behind national climate policies but ahead of market, financial and infrastructure features that have often been identified as important in the literature and public discussions on this topic). Those elements

were the global long-term emissions goal, an international

system to improve transparency and accountability

for national climate policies and the commitment

of governments to reduce emissions under the Paris

Agreement. These results tend to validate the view that

the hybrid nature of the Paris Agreement—setting global

goals while building a binding international system to

support nationally determined climate policies—has the

potential to significantly affect climate finance. That said, respondents emphasized that the impact of the Paris

Agreement on investment flows in the future depends upon further work and implementation.

Third, our survey data suggest that the most

important step for strengthening market signals from

the Paris Agreement could be a robust system of

transparency, including details about countries’ domestic

implementation and deep decarbonization plans. Indeed

responses from our core group of experts indicate that providing more details about how countries will

implement their targets is more important than the target

itself. We asked the post-Paris respondents to assess the

importance of five actions for supporting clean energy investments that individual countries took as part of the

Paris Agreement. The expert-investor respondents from that post-Paris deployment (n=72) ranked three actions

tied as most important: submitting a description of the

domestic laws and policies that will be implemented to

achieve the emissions reductions; producing a long-term

plan for decarbonizing the economy; and submitting a

specific target for deploying renewable energy.* In other

words, our investor respondents cared more about

the details of how a country will achieve its emissions

reduction target than the target itself.

Fourth, more work to evaluate the focus on public

finance within the UNFCCC negotiations could be especially valuable. Perhaps our most striking result was

the extent to which respondents mostly drawn from the US and UK private sectors considered international

governmental commitments to increase climate funding

to be relatively unimportant in mobilizing climate finance. In one respect, this tracks a well-established divide in

the UNFCCC negotiations, in which some developed

countries have argued that private funds must be counted

in evaluating progress toward climate finance pledges, while some developing countries have argued that

pledges should be met mostly or only from public funds.

Yet in other respects the survey results are potentially

revealing. In many contexts, private sector decision-makers look to governments to co-finance or share risk

*The fifth action we asked investors to judge was recognition by a country that its subsequent emissions reduction targets would increase in ambition. This factor was ranked lower than the top three, though the difference was not significant. In contrast, their ranking of the emissions-reduction commitment was significantly lower.†The developing-country respondents also thought the other international agreement features were more important than

increasing public finance. Due to the small sample size, this result should be viewed with caution.



before committing capital. The fact that private sector

respondents to our survey weighted international pledges

by governments to provide financing so low appears to indicate that the respondents find such pledges to be, at a minimum, several steps removed from decision-

making on private capital. Especially because private

sector capital flows are so much greater than those from the public sector, the views of private sector decision-

makers are worth exploring further.†

Fifth, our survey results underscore the importance of

creating adequate enabling environments in a country to

attract investment. When respondents considered what

would potentially prevent a climate finance investment, high levels of government corruption that would make

permitting and contract enforcement unpredictable

was the most cited factor. Countries that do not have

an adequate domestic enabling environment to foster

private investment (both domestically and from abroad)

run a serious risk of missing out on any benefits that may flow from positive market signals from the Paris Agreement.

All these observations are qualified by our limited sample, made up primarily of US and UK respondents. We would

welcome suggestions for refinements or adjustments to the methodology used in the survey, as well as the

opportunity to survey a much broader population.



CONCLUSIONMany factors will affect the growth in capital flows for climate finance in the years ahead. Seeking stakeholder views on the relative importance of those factors can

provide important insights.

Our survey using “conjoint analysis,” a well-established tool widely used in market research, suggests that

stakeholders rate some factors identified in the literature for promoting climate finance as far more important than others. Our respondents deemed national climate policies the most important, with international actions such as the

Paris Agreement second. Different features of the Paris

Agreement were ranked differently. The relatively low

priority respondents attached to governmental pledges

to increase climate finance under the UNFCCC was striking, although the composition of the respondent

pool (principally the US and UK private sector) shaped

that outcome.

Our survey results provide empirical support for the idea that a strength of the Paris Agreement in influencing investors is its hybrid nature, linking collective

international actions like the long-term temperature

goal with specific individual country actions reflected in the INDCs. The best short-term opportunities for

strengthening signals from the Paris Agreement could

be to make progress on the transparency system and to

encourage more countries to come forward with their

long-term decarbonization plans. Our respondents were more interested in the details of how countries will meet

their targets than in the target itself.

Statements such as “the Paris Agreement sent a signal

to the private sector” provide an important top-line summary. Analyzing which features of the Paris

Agreement make the most difference, and what other

factors influence private sector decision-makers, will be important to strengthening that signal over time.

Conjoint survey methodology offers a useful tool for further work in this area.



APPENDIX AQuestions Asked in Conjoint Portion of the Survey

Below are the instructions and questions survey

respondents were given:

“In this first step, you will indicate the relative importance of features for creating a more favorable state for climate

finance investment by selecting your most preferred and least preferred feature level from the options below. For

purposes of the following, ‘Most Preferred’ and ‘Least

Preferred’ mean the most and least important factors in

creating a favorable state for climate finance.”

“In this second step, you will indicate the relative

importance of feature levels for creating a more favorable

state for climate finance investment. Please indicate the important of each option below (with 10 being the most

important and one being the least important). The options

you selected as ‘Most Preferred’ and ‘Least Preferred’

in Step 1 are automatically assigned the maximum and minimum values, respectively.”

“In this third step, you will indicate the relative importance

of feature levels for creating a more favorable state for

climate finance investment by allocating 100 points across the options you selected as your most preferred options.”

“In this final step, you will indicate the relative importance of features (categories) for creating a more favorable

state for climate finance investment by allocating 100 points across the broad categories we provided.”

Four “Feature Categories” and 21 “Feature Levels”

National Energy and Climate Features

• National price on carbon

• Eliminated/reduced subsidies for fossil fuel use

• Developed/increased subsidies for renewable fuel

use

• Consistency of financial support for green investment • Significant amount of financial support for green

investment

• Support for feasibility studies for green projects

International Agreement Features

• International commitments to increase public

finance • Global long-term emissions reduction goal

• Countries make commitments to reduce GHG

emissions

• Countries develop international system to improve

transparency and accountability for national climate

policies

Market and Financial Features

• Lower corporate taxation on investment • Reduced cost of capital

• High/growing energy demand in country

• Fossil fuel commodity prices

• Availability of cash grants

• Availability of credit financing

National Infrastructure Features

• Predictability in permitting and licensing

• Predictability in enforcing private contracts

• Publicized national infrastructure roadmap

• Availability of local financial services • Monitoring of projects to provide better data on

infrastructure transactions



NOTES1 A. Little, “Signal and Noise at the Paris Climate Summit,”

The New Yorker, Dec. 10 2015, available at: http//www.

newyorker.com/news/news-desk/signal-noise-paris-

climate-summit

2 Frankfurt School, UNEP Centre, BNEF, “Global Trends in

Renewable Energy Investment,” 2016, p. 5.

3 C. Kraus and K. Bradsher, “Climate Deal Is Signal to

Industry: The Era of Carbon Reduction Is Here,” The New York Times, Dec. 13, 2015, available at: http://www.nytimes.

com/2015/12/14/business/climate-accord-draws-mixed-reaction-from-business-leaders.html?_r=0

4 Ibid.

5 See S&P Global Clean Energy Index at Figure 2.

6 International Energy Agency, World Energy Investment

Outlook 2014, p. 44, and World Energy Outlook 2015 p. 368.

7 International Energy Agency, World Energy Outlook 2015, p. 60, authors’ analysis.


Renewable Energy Investment,” 2016, p. 20.

9 Climate Policy Initiative, “Global Landscape of Climate

Finance 2015,” Climate Policy Initiative, Nov. 2015, p. 10.

10 OECD, Climate Policy Initiative, “Climate Finance in 2013–2014 and the USD 100 Billion Goal,” 2015, p.10.

11 Climate Change Finance Unit, Department of Economic

Affairs, Ministry of Finance, Government of India, “Climate

Change Finance, Analysis of a Recent OECD Report: Some Credible Facts Needed,” 2015.

12 S. Cox, “Financial Incentives to Enable Clean Energy Deployment,” National Renewable Energy Laboratory, 2016, available at: http://www.nrel.gov/docs/

fy16osti/65541.pdf; Report of the Canfin-GranJean Commission, “Mobilizing Climate Finance: A Roadmap

to Finance a Low-Carbon Economy,” 2015, available at: http://www.elysee.fr/assets/Report-Commission-

Canfin-Grandjean-ENG.pdf; T. Kato, et al., “Scaling up

and Replicating Effective Climate Finance Interventions,” OECD/IEA Climate Change Expert Group Paper 2014(1),

2014, available at: http://www.oecd.org/env/cc/Scaling_

up_CCXGsentout_May2014_REV.pdf; C. Kaminker,

et al., “Institutional Investors and Green Infrastructure

Investments: Selected Case Studies,” OECD Working Papers on Finance, Insurance and Private Pensions, No. 35, 2013,

available at: http://dx.doi.org/10.1787/5k3xr8k6jb0n-en.

13 See, e.g., UN Secretary General Climate Change Support

Team, “Trends in Private Sector Climate Finance,” 2015; C. Kaminker, et al., “Institutional Investors and Green

Infrastructure Investments: Selected Case Studies,” OECD Working Papers on Finance, Insurance and Private Pensions,

No. 35, 2013; S. Luthi, T. Prassler, “Analyzing policy support

instruments and regulatory risk factors for wind energy

deployment—A developers’ perspective,” Energy Policy 39, 4876–4892, 2011.


Renewable Energy Investment,” 2015, pp. 11, 20.

15 Polzin, Friedemann and von den Hoff, Maximilian and Jung, Maximilian, Drivers and Barriers for Renewable Energy Investments in Emerging Countries – The Case of Wind

Energy in China, India and Brazil (November 13, 2015).

Available at SSRN: https://ssrn.com/abstract=2690477 or

http://dx.doi.org/10.2139/ssrn.2690477

16 e.g. Pignone, Michael P., et al. “Conjoint analysis versus rating and ranking for values elicitation and clarification in colorectal cancer screening.” Journal of general internal medicine

27.1 (2012): 45–50. < https://www.ncbi.nlm.nih.gov/pmc/

articles/PMC3250548/>; Ryan, Mandy, and Shelley Farrar.

“Using conjoint analysis to elicit preferences for health care.” British Medical Journal 320.7248 (2000): 1530. < http://

search.proquest.com/openview/5a39753b361bd9914435

c8ff4a097ae8/1?pq-origsite=gscholar>; de Bekker; Grob,

Esther W., Mandy Ryan, and Karen Gerard. “Discrete choice

experiments in health economics: a review of the literature.” Health economics 21.2 (2012): 145–172. < http://onlinelibrary.

wiley.com/doi/10.1002/hec.1697/full>

17 e.g. Álvarez-Farizo, Begoña, and Nick Hanley. “Using

conjoint analysis to quantify public preferences over the environmental impacts of wind farms. An example from Spain.” Energy policy 30.2 (2002): 107–116.; Alriksson, Stina,

and Tomas Öberg. “Conjoint analysis for environmental evaluation.” Environmental Science and Pollution Research 15.3

(2008): 244–257.



18 Steg, Linda, Lieke Dreijerink, and Wokje Abrahamse. “Why are energy policies acceptable and effective?” Environment and

behavior 38.1 (2006): 92–111.

19 Srinivasan, Venkat. “A conjunctive–compensatory approach to the self - explication of multiattributed preferences.” Decision Sciences 19.2 (1988): 295–305.; Srinivasan, Vinay,

and Chan Su Park. “Surprising robustness of the self-

explicated approach to customer preference structure measurement.” Journal of Marketing Research (1997): 286–

291; “A Brief Explanation of Conjoint Analysis” Qualtrics University. 2016. < https://www.qualtrics.com/wp-content/

uploads/2012/09/ConjointAnalysisExp.pdf>

20 Qualtrics Labs, “Qualtrics Survey Software Handbook

for Research Professionals: Official Training Guide from Qualtrics,” Qualtrics (2012): http://cloudfront.

qualtrics.com/q1/wp-content/uploads/2012/02/

QualtricsSurveySoftware.pdf>

21 Respondents ranked the individual features within each

category using the same methodology described in the note

to Figure 2.

The Kurdish Regional Government completed the construction and commenced crude exports in an independent export pipeline connecting KRG oilfields with the Turkish port of Ceyhan. The first barrels of crude shipped via the new pipeline were loaded into tankers in May 2014. Threats of legal action by Iraq’s central government have reportedly held back buyers to take delivery of the cargoes so far. The pipeline can currently operate at a capacity of 300,000 b/d, but the Kurdish government plans to eventually ramp-up its capacity to 1 million b/d, as Kurdish oil production increases. Additionally, the country has two idle export pipelines connecting Iraq with the port city of Banias in Syria and with Saudi Arabia across the Western Desert, but they have been out of operation for well over a decade. The KRG can also export small volumes of crude oil to Tur-key via trucks.

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